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TESLA -GLOBAL STRATEGY & SUSTAINABILITY

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Table of Contents
Task1: Introduction...................................................................................................................................... 4

Task 2: External and Internal Environment...............................................................................4

Task 3: Strategy in the Global Environment............................................................................10
Task 4: Corporate Strategy.......................................................................................................12
Task 5: Strategic Purpose-Ethics and CSR..............................................................................16
Task 6: Conclusion...................................................................................................................18
References................................................................................................................................19

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Task1: Introduction
Tesla Inc. is an American company that is the highest manufacturer of electric vehicles such
as solar panels, solar roofs, hybrid cars, etc. Tesla Inc. was incorporated in July 2003 by two
American businessmen Martin Eberhard and Marc Tarpenning as Tesla Motors, previously it
was Tesla motors. The headquarter of Tesla is in Palo Alto California, Tesla is seriously
working on a greener world and sustainable energy. Tesla is producing high-performance
automobiles for high-end customers, with long-range and no tailpipe emissions. It is also the
safest, highest-rated car on the road in the world (Market Trends, 2020).
Firstly, Tesla developed sports cars but they changed their strategy and started electric
vehicles solar products, etc. The chief executive officer of Tesla is Berhard and its chief
financial officer is Tarpenning. Elon Musk was the cofounder of PayPal fintech company,
which invested more than $30 million in the new venture and became chairman of the
company, starting in 2004. The Roadster was the first model of Tesla in the electric vehicle
market. The current model of the company is Tesla Model 3.

Task 2: External and Internal Environment

The external and internal factors are responsible for the long-term success of the company.
There are many models regarding the external and internal environment. The external factors
indirectly affect the environment of the company and internal factors are directly related to
the company’s matters. PESTLE, as well as Porter’s five force strategies of Michael Porter,
are used for the external analysis while SWOT analysis and

VRIO framework for internal analysis of Tesla.

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 Figure-1 PESTLE analysis for Tesla
.

Political: The company should use different incentive schemes offered by the government for
expansion and growth, any country offers an incentive, to improve the economic condition of
the country, also Tesla has an opportunity to reduce carbon emissions by designing various
electric vehicles model that is environment friendly. The political setting of the country is
incredibly vital for the stability of the business.

Economic: Economic stability is related to the present market scenario, and it is the time for
environment-friendly products, so vast opportunities lie ahead for Tesla, also the exchange
rate and taxation scheme are favorable for Tesla. As we know, Tesla produces very expensive
cars, it is difficult for the middle class to buy such cars, company is focusing on reducing the
cost of electric vehicles such as the industry set up in China. It will be a great move.

Social: Social factors are heavily influenced by the market, In the case of Tesla, It is
supported by market demands. Eco-friendly products are huge in demand and electric
automation is one of them. Customer feedback is good and electric vehicle is the demand of
the future in both the long and short term and the chances of revenue are high.

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Technological: Tesla massively supports technology-oriented products and the progress of
Tesla’s automotive and energy solutions venture depends on available technologies
(IvyPanda, 2021). Its products are highly advanced which is a key factor to attract rich
customers.

Legal: Legal factors are very important for the success of any business. Tesla should follow
the legal process of the countries where they are operating. Also care about intellectual
property laws, patenting, and copyrights.

Environment: As we know, pollution is damaging our ecosystem deliberately Inch by inch, It

is very important to reduce the pollution on the earth. for sustainability, it is mandatory to
scale back the carbon emission from vehicles. Tesla is dedicated to sustainable goals. The
company is developing products that are eco-friendly and favor people too.

Porter’s Five force model

Figure 2: Porter’s Five force model for Tesla (Ovidijus Jurevicius, 2021)

Tesla adopted Michael Porter’s model which represents the generic competitive strategy.

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This model has five components and Tesla’s core area in the generic strategy is the state-of-
the-art technologies in its electric cars and similar products. This model is used for the current
decision-making process for the company as well as the future too.

The threat of new entrants: Tesla has less threat of new entrants because Tesla is a major
player in the EVs market and also has a highly specific brand with a diversified outlook.

Bargaining power of buyers: Tesla is facing moderate bargaining power from the customers.
Buyers can easily switch to other brands because not much competition and cost in the
electric vehicle market.

Bargaining power of suppliers: In this company, the bargaining power of suppliers is high As
we know Tesla is too inclined toward vertical integration and forward integration. Tesla hires
multiple suppliers for the procurement of different components.

The threat of the substitute product: The threat of the substitute in Tesla is moderate to low.
Design restructuring is the main competitive advantage of Tesla over other competitors. Nio
is also manufacturing plug-in hybrid cars but not like Tesla EVs.

The intensity of rivalry among competitors: Tesla has rivals such as BYD, Volkswagen, and
Nio. They are also working on the same model, but at the same time, Tesla is far ahead in the
innovation and uniqueness of the product in the electric automation market.

VRIO Analysis: VRIO has four parts valuable, rare, inimitable, and organization. It helps the
company in the analysis of resources and capacities of input.

The Tesla Motors VRIO Analysis, analyze the four components of available resources which
could be improved for the competitive advantage and also summarised whether they offer
sustained competitive advantage, has an unused competitive advantage, temporary
competitive advantage, competitive parity, or competitive disadvantage (Zachary Edwards,
2018).

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 Figure-3 VRIO framework steps (Nicolas Entzminger, 2020)

Resource/ Valuable Rare Inimitable Organized Competitive Temporary

Capabilities Advantage Advantage
Brand

Innovation

Advanced
Technology
Direct sale

Vertical
Integration
Market
Position

Table 1: VRIO Analysis of Tesla

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SWOT Analysis: SWOT stands for strengths, weaknesses, opportunities, and threats. In this
analysis, we analyze the position of the company in the market. Strength and weakness are
internal factors to the company and opportunities and threats external to the company.

Strength:

 Tesla is an established brand in the field of electric vehicles, and on this point, the
company may enjoy the benefit of monopolism.
 It is also known for its sustainability policy.
 Tesla has strong R&D facilities and the company invested immensely.

Weakness:

 Tesla should strictly follow the policy and guidelines of the industry and countries.
 Secondly, the untrained staffs are unable to handle the responsibilities of the company
 Tesla is a very expensive company and its products have limited access to the world.

Opportunity:

 The best opportunity tesla can exploit is the issue of clean environmental
practices.
 Norwegian market and China market is the big destination for Tesla
 Futuristic growth is the key for Tesla

Threat:

 Major threat to Tesla is from its competitors such as BYD, Volkswagen, and Nio.
They are also working on the same model
 Intense rivalry among the competitors
 Changing strategy could be harmful.

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 The business model of Tesla:

 The business model followed by Tesla is based on direct sales and service, not
franchised dealerships.
 The business model of Tesla focuses specific attention on bringing out charging
stations.

Profitability analysis and critical factors of Tesla:

Tesla is showing a healthier debt-equity ratio and is financially strong presently analysis is
showing the critical factors are a huge investment in research and innovation, profit margin,
and solid penetration in the Asian market such as China & India they also want to work with
the environmental management system and energy solution

Competitive advantage:

The competitors are General Motors, Toyota Motor, BMW, and others who also try to do this
(Christine Rowland, 2018). Apart from the generic competitive strategy, Tesla focuses on
intensive strategies to develop new avenues for growth and economic stability. Broad
differentiation is part of a generic competitive strategy and Tesla follows a broad
differentiation strategy.

Therefore, Tesla is nearer to being an innovation organization than a conventional car

producer. The Environment Management System model is reaching out to the e-vehicle
industry and any approximation Foxconn and Jabil are working with brands including
Chrysler, General Motors Daimler, Jaguar, Ford, and Volkswagen (IvyPanda, 2021).

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 Task 3: Strategy in the Global Environment
Tesla’s goal is to speed up the world’s transition to sustainable energy. Tesla adopts a
transnational level strategy in the international market. Tesla’s sixty percent of revenue
comes from the United States, according to Thomson Reuters, Tesla aims to tap the
opportunities of the international markets to expand globally, especially in the electric
vehicles market of the European and Asian continents.

Tesla has witnessed a hike in price by close to 35% in 2019 driven by growing revenues and
a solid pricing strategy (Market Trends, 2020).

 Tesla follows the direct sale strategy model in the market. But entering into the
foreign market Tesla selects exporting process. Export is a process of less
commitment
 Tesla has some pre-owned programs in European countries.
 The strategy of expansion in the international market is profitable for the company
which is based on strategic positioning, although, tesla faces numerous challenges
regarding cost reduction at the entry-level of the global market. To counter such
issues, Tesla needs to design commodity-type vehicles in the foreign market.
 Next strategy is responsiveness toward the need of the local buyers.

Yip’s globalization drivers’ model:

Yip witnessed the four types of globalization drivers in the industry and it is responsible,
for the potential viability of a global approach to strategy (2012books, 2012).

Figure-4 Yip’s global drivers (solutioninn, 2022)

Market Drivers:

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Market drivers are related to the convergence of the demand of customers on a global
platform. Tesla fulfills the need of customers based on similarity in demand and services in
its global market. Tesla also pays heed to the uniqueness of its products which is a
differentiation focus strategy and customers like it.

Cost Drivers: Cost is a major factor in the economies of scale of a country and the
standardization process. Balance the competitive strategy on the global level is highly

The difficult job for Tesla as well as competitive rivalry within the industries creates trouble

At entry level. If we see the product development and market development of Tesla, the
company uses an intensive growth strategy for increasing its market share.

Competitive drivers: Each day competitive environment is intensifying the electric vehicle
Market. This is used for analyzing the competitor’s diversity and interdependence between
them. These two factors are very important for globalization. In the case of Tesla, Nio and
Toyota are the rivals.

Government Drivers: These are the government trade policies, restrictive policies,
Regulations, and technical aspects for structuring the global competitive environment. The
govt policies are favorable for Tesla as well as for the EVs market.

Yip’s globalization drivers’ model, analyzed the many aspects of the global market but
product distribution for Tesla is at a localized level.

Strategic alliance model: Tesla is also preparing for a strategic alliance for entry into new
countries and expanding its business in Shanghai for electric vehicles, New York for a new
Gigafactory plant, and many more. A strategic alliance is a strategy between two companies
On mutual understanding and they use the same stratagem for the manufacturing of products.
Tesla has been betting big on cameras to collect data from over one million vehicles on the
road to develop its automated driving technology. Tesla cars may benefit from this
partnership. Tesla cars may benefit from this partnership (HT Auto Desk, 2022).

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Task 4: Corporate Strategy
Vertical and horizontal strategies are part of the corporate restructuring and the company uses
these strategies for development and growth. Tesla has a very strong vertical integration
process. Vertical integration is the process of going forward and backward in supply chain
management. Tesla chooses many steps in vertical integration such as self-driving algorithm,
from battery production to electric motor vehicles. Tesla is more vertically integrated and its
supply chain is very innovative.

Reason for using vertical integration in Tesla:

 Supply chain complexity in the EVs.

 Well-planned supplier
 Cost effective
 Fast delivery
 Authentic goods and profit generation

There is no report of outsourcing in Tesla but in the future, the company may outsource some
parts from Samsung.

Next is a Strategic alliance, in which two companies get mutual benefit from the project
without disturbing each other. In the case of Tesla. It has two strategic alliances,

One with Toyota and the other with Daimler AG.

Profitability recommendation to Tesla:

To increase its profitability, Tesla must reduce the price of its product, presently Tesla
focuses on high-end customers. The company has very expensive cars which are difficult

To access by general customers. Tesla has also a high-profit margin and it needs to reduce it.
The new Shanghai factory of Tesla is built to cater to the demand of the Asian market which
is comparatively cheaper and more efficient.

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 Figure 5: Steps of Vertical Integration (Behzad Benam, 2020)

Tesla Ansoff Matrix is a marketing planning model that can be used by alternative fuel
vehicles manufacturer to make strategic decisions (John Dudovskiy, 2021).

Ansoff Matrix for Tesla Inc: Ansoff matrix or Ansoff growth matrix is a marketing planning
tool that helps in analyzing the business diversification process.

Figure 6: Ansoff matrix (John Dudovskiy, 2021)

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 1. Market Penetration: In which we analyze the current market and current product sales.
Tesla embraces an aggressive penetration strategy to achieve maximum revenue
From the US.
2. Product development: In this matrix, the new product has been brought into the
existing market. Tesla adopt this strategy for technological advancement in the
electric vehicle market because they invested hugely in the research.
3. Market Development: This matrix is basically for existing products in the new market
And Tesla is busy bringing old products to the new market of Asia.
4. Diversification: This strategy is related to a new product in a new market. Tesla is
introducing new products which are not related to EVs in the new market.

Tesla adopted a strategic alliance for the growth of the company. Tesla embraced three types
of strategic alliances and these are:

1. Vertical integration alliances with suppliers

2. R&D Alliance
3. Original Equipment Manufacturer (OEM) Alliances

Figure 7: Tesla’s strategic partnership ( John Lang, 2021)

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BCG Matrix: The Boston consulting group or BCG matrix is a marketing strategy of tesla
which helps in analyzing long-term growth. The vertical axis shows the market growth rate
and the horizontal axis reveals the relative market share. It has four quadrants of stars,

question marks, cash cows, and dogs. More than 40 years after Bruce Henderson introduced
BCG’s growth share matrix, the concept is very much alive. Companies continue to need a
method to manage their portfolio of products, R&D investments, and business units in a
disciplined and systematic way (Martin Reeves, 2014).

Figure:8 BCG matrix of Tesla (vishnuvrn, 2022)

 Stars: It has a high-income generation but consumes much cash in generating revenue.
Among the ten luxury cars, the Model S of Tesla imbibed thirty-four percent of sales
Therefore, it belongs to the star category of the BCG Matrix and shows a promising
future.
 Cash Cows: It has a large relative market share and a low market growth rate for the

products. It is present on the left side. The Zero Emission Vehicle or ZEV credits fall
into the cash cow quadrant for Tesla.
 Question Marks: Company has an opportunity to work in a high-growth rate market
But market share is always low in the question mark. Two years ago, the Model 3 for
Tesla was in this quadrant.
 Dogs: Both market share and market growth are low in Dogs. Tesla has a problem
with producing Model 3 and it belongs to the Dog category of the BCG matrix.

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Task 5: Strategic Purpose-Ethics and CSR
The company's development and sustainability rely on the core philosophy of the work. 
The outcome relies on valuing human resources and protecting them from hazardous work. 
Additionally, Elon, the CEO of Tesla, and the Product Architect are criticized by some corpor
ations. 
Critics accuse the business of deceitful marketing, making false promises, and engaging in fra
ud. 
A production technician for the Tesla company has seen some physical injury to workers ther
e, and  The leading newspaper of the UK ‘The Guardian’ published a report on workers’
oppression and bad treatment, a production technician of the Tesla company witnessed some
physical injury to workers in Tesla and demanded the company's ethical practices such as
mandatory overtime, frequent worker injuries, and low wages. This type of behavior is not
only unethical but also an irresponsible act
Major ethical issues faced by Tesla:

 False allegation of advertising

 Safety issues of the workers
 Auditing fraud
 Government funding issues
 Failure of autopiloting

The challenges are managed by adopting the following strategy:

 Establish good work ethics in the company

 Inculcate the habit of employing the good governance
 Establish truthfulness, transparency, and honesty in the management system
 Teach emotional intelligence to the HR team as well as leaders.
 Implementation of safety incentive program strictly.

Corporate social responsibility is the accountability of the companies to give something back
to the society and environment. Tesla Inc.’s corporate social responsibility strategy (CSR)
proposes some of the major interests of the stakeholders of the automotive and energy
solutions business.

Carroll’s Pyramid: “CSR defines the business model and degree of responsibility
companies should maintain to have a positive impact on the world. The CSR model outlines
how a company can be accountable to itself, its staff, its stakeholders, the public, and global
and local environments ( Victoria university, 2020).”

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 Figure 9: Caroll’s CSR Pyramid (The Impact Investor, 2022)

 Economic: Economic responsibility is the backbone of any society if Tesla wants

sustainability in long term, the company has to invest in its stakeholders and
shareholders. Tesla is working for a greener world by making EVs.
 Legal: The company must act under law and regulations. It is the responsibility
The govt to provide clean water and air to its people and company should comply
With regulatory affairs of the country such as Tesla. Tesla is serious about sustainable
goals.
 Ethical: Ethical practices are always related to people’s welfare approach. Ethical
practices
Varies from country to country or society to society. It is a moral decision made by
the business. Tesla needs to inculcate more ethical values in the company.
 Philanthropic: Although it is related to charity the strategy adopted by Tesla is
producing electric vehicles which is very good for the environment and society.

In a nutshell of Caroll’s CSR pyramid of Tesla, the company is focussing on stakeholders and

Social goals such as making solar products, electric vehicles, and innovative new products

For the betterment of society.

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The CSR foundation of Tesla coordinate with employees and community stakeholders and
said C-suite and middle-level manager must be stressed HR, employee engagement, and
philanthropy. Tesla must follow the principles of CSR while making cars and other products.

Task 6: Conclusion
Tesla is a cutting-edge business that is revolutionizing the auto sector by fusing technology
with environmental objectives. Tesla began an electric vehicle revolution, and it is a response
to the market's shifting demands, that will undoubtedly fulfill the need for crisis management
around the world.

According to Pew Research, in the USA, 80% of the population owns an automobile. For
viability or growth, Tesla should seize this chance and launch an advertising campaign
regarding electric vehicles in the US market. This corporation also needs to reduce prices and
uphold high ethical standards.

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